Distinguish between the plant wide overhead rate method, the departmental overhead rate method, and the activity-based...

Distinguish between the plant wide overhead rate method, the departmental overhead rate method, and the activity-based costing method

Expert Solution

In plant wide overhead rate a single rate is applied to distribute overheads in all the departments no matter which machine they use (Costly or inexpensive). This method is normally used when all the departments produce similar products which go through same kind of manufacturing process. It can be on the basis of machine hour or labour hour or as a % of direct cost.

In departmental overhead method , different rate are calculated for each department acc to the machine cost involved or Overhead incurred. This way the department in which costly machine is used gets more overhead allocation.This method is used when there are diverse products manufactured. So it can be possible that for dept 1 we use machine hours while for dept 2 we use labour hours.

Activity based costing costing is the best method. in this method , overheads are distributed into different activities and each activity has a different Cost driver. absorption rate for each activity is used for allocating overheads. For ex . packaging , Machine set up , machine maintenance etc.

ekkarill92 answered 1 year ago

Departmental Overhead Rate: Home Run Practice Problem Fairfield Manufacturing currently allocates manufacturing overhead costs by plant-wide...

Departmental Overhead Rate: Home Run Practice Problem Fairfield Manufacturing currently allocates manufacturing overhead costs by plant-wide overhead rate using direct labor costs. D. Shim, a controller argues for departmental overhead rates to allocate manufacturing overhead costs to products. For department overhead rates, manufacturing overhead costs are allocated on the basis of machine hours in the Machining Department and on the basis of direct labor-hours in the Assembly Department. At the beginning of 20X3, the following estimates were provided for the...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 20 people, and the Assembly Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Molding Department are budgeted at $190,000, and the Assembly Department costs are budgeted at $80,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 19 people, and the Assembly Department employs 75 people. Each person in these two departments works 2,180 hours per year. The production-related overhead costs for the Molding Department are budgeted at $198,000, and the Assembly Department costs are budgeted at $73,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 25 people, and the Assembly Department employs 75 people. Each person in these two departments works 1,940 hours per year. The production-related overhead costs for the Molding Department are budgeted at $180,000, and the Assembly Department costs are budgeted at $76,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 24 people, and the Assembly Department employs 77 people. Each person in these two departments works 1,890 hours per year. The production-related overhead costs for the Molding Department are budgeted at $199,000, and the Assembly Department costs are budgeted at $96,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 23 people, and the Assembly Department employs 76 people. Each person in these two departments works 1,920 hours per year. The production-related overhead costs for the Molding Department are budgeted at $221,000, and the Assembly Department costs are budgeted at $91,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 23 people, and the Assembly Department employs 78 people. Each person in these two departments works 1,820 hours per year. The production-related overhead costs for the Molding Department are budgeted at $196,000, and the Assembly Department costs are budgeted at $91,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 15 people, and the Assembly Department employs 79 people. Each person in these two departments works 1,850 hours per year. The production-related overhead costs for the Molding Department are budgeted at $210,000, and the Assembly Department costs are budgeted at $74,000. Two support departments—Engineering and General Factory—directly support the two production...

direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 23 people, and the Assembly Department employs 78 people. Each person in these two departments works 2,020 hours per year. The production-related overhead costs for the Molding Department are budgeted at $177,000, and the Assembly Department costs are budgeted at $86,000. Two support departments—Engineering and General Factory—directly support the two production...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 21 people, and the Assembly Department employs 79 people. Each person in these two departments works 2,020 hours per year. The production-related overhead costs for the Molding Department are budgeted at $236,000, and the Assembly Department costs are budgeted at $86,000. Two support departments—Engineering and General Factory—directly support the two production...

Question

Distinguish between the plant wide overhead rate method, the departmental overhead rate method, and the activity-based...

Solutions

Expert Solution

Related Solutions

Departmental Overhead Rate: Home Run Practice Problem Fairfield Manufacturing currently allocates manufacturing overhead costs by plant-wide...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...

Direct Method, Reciprocal Method, Overhead Rates Macalister Corporation is developing departmental overhead rates based on direct...